GR 126696; (January, 1999) (Digest)
G.R. No. 126696 January 21, 1999
SECURITY BANK & TRUST COMPANY, petitioner, vs. TRIUMPH LUMBER AND CONSTRUCTION CORPORATION, respondent.
FACTS
The respondent, Triumph Lumber and Construction Corporation, was a depositor with a current account at the petitioner Security Bank & Trust Company’s Sucat, Parañaque branch. On March 23 and 24, 1987, three checks (Nos. 466779, 466777, and 466780) payable to cash, drawn against the respondent’s account and totaling P300,000.00, were presented and encashed at the bank. The respondent claimed the signatures of its authorized signatories (Co Yok Teng and Yu Chun Kit) on these checks were forged, and that the bank was grossly negligent for failing to verify the encashment of checks exceeding P10,000.00 and for not detecting the forgery. The respondent demanded reimbursement, which the bank refused. The bank contended that the checks passed its standard verification procedures and that the respondent was negligent, having discovered a burglary in its office where check booklets were kept on the same day the checks were encashed, yet failed to report the incident to the police or the bank. The trial court dismissed the complaint, finding no preponderant evidence of forgery and holding the respondent negligent. The Court of Appeals reversed, ordering the bank to reimburse the respondent, holding that forgery was established and that the bank was negligent.
ISSUE
The primary issue is whether the petitioner bank should bear the loss from the encashment of the checks due to alleged forgery and negligence, or if the respondent depositor’s own negligence precludes recovery.
RULING
The Supreme Court REVERSED the decision of the Court of Appeals and REINSTATED the trial court’s decision dismissing the complaint. The Court held that the respondent failed to prove by preponderance of evidence that the signatures on the checks were forged. The respondent did not present the original checks in court, warranting a presumption that their production would be adverse to its case. The testimony of the respondent’s expert witness, who examined only photographs of the checks and not the originals, was insufficient to prove forgery. The bank’s employees testified to following standard verification procedures. Furthermore, the Court found the respondent guilty of negligence which substantially contributed to the loss. The respondent discovered a burglary in its office where the check booklets were kept on the very day the checks were encashed but did not report it to the police or the bank, and even made substantial deposits thereafter. This failure to take immediate preventive measures constituted negligence, barring recovery from the bank. The bank’s alleged admissions in its answer did not constitute a judicial confession of forgery, as they were phrased as defenses assuming forgery hypothetically.